What is a tax relief?

A tax relief refers to a reduction in the amount of tax that a taxpayer is required to pay, typically granted for specific expenditures or contributions. This can include various allowances, deductions, or credits that lower the overall tax liability. For instance, expenses for business activities, charitable donations, and certain investment contributions can qualify for tax relief.

The concept is fundamental in tax systems as it aims to alleviate the financial burden on individuals and businesses, incentivizing particular behaviors or spending that the government wishes to encourage, such as investment in jobs, education, or sustainable practices. Tax relief helps to ensure fairness in taxation, as it can adjust the effective tax rate based on the taxpayer's circumstances or economic activity.